Energy Predictions for 2025

Following a turbulent few years in the energy sector, staying informed about the energy market has never been more important. From ensuring regulatory compliance, to cost management and reaching your sustainability goals, by keeping up to date with what’s happening in the energy sector, as well as wider world news, you can set your business up for success in 2025.  

In this blog, we’ll explore key energy predictions for 2025, including energy cost forecasts, emerging technologies in the energy sector and how you can navigate the energy landscape in 2025.  

2024 was a big year for energy. We saw a surge in renewable energy investment, changes in regulations and new projects aimed at reshaping the energy landscape in the coming years.  

• The Energy Act 2023 – in October 2023, the UK Energy Act was introduced, having a significant impact on the energy sector in 2024. This act instated new regulations for energy production and consumption, as well as placing greater emphasis on sustainability initiatives. It also aims to unlock £100 billion in private investment for energy infrastructure. 

• Autumn Budget 2024 – the new Labour Government’s 2024 Autumn Budget outlined several key initiatives that impacted the UK energy sector, including: 

• An allocation of £100 million through the National Wealth Fund to support the development of clean energy projects 

• Establishment of Great British Energy (GB Energy), a publicly owned organisation dedicated to enabling whole-system energy development. 

• An increase of 3 percentage points for The Energy Profits Levy for oil and gas producers 

• Market uncertainty– the energy market has remained uncertain throughout 2024, with prices being influenced by geopolitical tensions, supply chain disruptions, and varying demand. This volatility made it difficult for businesses to forecast energy expenses accurately.   

• Energy Bill Discount Scheme (EBDS) termination – The EBDS provided temporary discounts for businesses to help them with their energy bills. However, this scheme ended in March 2024, meaning businesses no longer had this support.   

Although it is impossible to predict for certain, the energy cost forecast predicts a very jumpy and volatile energy market in the upcoming year, with factors such as region, energy supplier, and nature of business can all effect the rates you may pay. 

Research from Cornwall Insight indicates that small businesses, such as pubs and restaurants, are paying over £5,000 more annually on energy bills compared to pre-crisis levels. The average electricity bill for a small business is projected to increase by 70%, compared to before the energy crisis.  

Unlike domestic customers, non-domestic energy users are not protected by a business energy price cap.  

As a result, businesses are fully exposed to market fluctuations and should consider strategies such as energy efficiency measures and fixed-rate contracts to protect against price fluctuations and manage energy costs more effectively. 

With the Net Zero by 2050 target still firmly in place, it makes sense for much of the energy predictions for 2025 to be centred around renewable energy and environmental sustainability.  

In 2024, nearly 58% of the UK’s power was sourced from renewables, with wind energy contributing the largest share. This trend is expected to continue in 2025, with both onshore and offshore wind playing a large role in the UK’s energy generation.  

The Labour Government has taken a significant step towards boosting renewable energy by removing the de facto ban on onshore wind farms in England. The de facto ban was introduced in 2015 and meant that in order for new wind farm projects to be approved, they had to have unanimous local community support. This also placed heavy restrictions on where wind turbines could be built, resulting in many onshore wind development projects being halted. 

With this ban being lifted, more wind farm projects will be given the green light, helping the UK to generate more cost-effective green energy.  

In addition to this policy shift, Labour has committed to doubling Britain’s current onshore wind capacity by 2030, creating new jobs and reducing our reliance on fossil fuels. 

2025 is set to be a big year for electric vehicles too, with projected increases in EV sales, infrastructure development, and new EV model releases.  

According to Cox Automotive, 1 in 4 vehicles sold in the UK in 2025 will be electric, accounting for approximately 10% of the market total. Hybrids will account for approximately 15% of vehicles, whilst ICE vehicles will fall to 75% – the lowest level on record.  

This is in part due to the increasing availability of EV infrastructure across the country with projections indicating over 100,000 public EV chargers by mid 2025. 

The rules around EVs in the UK will also be changing from April 2025, with EV exemption from Vehicle Exercise Duty (VED) being scrapped. The Chancellor said; ‘Because the Office for Budget Responsibility forecasts half of all new vehicles will be electric by 2025, to make our motoring tax system fairer, we’ve decided that from then, electric vehicles will no longer be exempt from vehicle exercise duty.’ 

Although many EV drivers may be unhappy at this change, tax rates for electric vehicles will still remain lower than that for internal combustion engine vehicles.  

With the EV market evolving rapidly, businesses should consider how these changes could impact their fleet, energy costs, and sustainability goals. Whether you’re planning to invest in EVs, install workplace charging stations, or explore energy efficiency measures, now is the time to prepare. To get ahead of the transition, talk to our team today to explore energy solutions tailored to your business needs. 

One of the most significant factors that affects the outlook for energy predictions in 2025, is changes and developments in energy technology.  

Artificial Intelligence (AI) 

AI is expected to have a notable impact on the business energy sector in coming years, particularly when it comes to transitioning the country to more sustainable energy solutions.  

AI can help businesses make smarter decisions when purchasing energy. By analysing market trends and historical data, it can help forecast fluctuations in energy prices, helping influence energy cost predictions so businesses can find the right time to buy energy. 

There are also ways that AI can help optimise renewable energy generation. One of the biggest challenges faced when it comes to generating renewable energy is the unpredictable nature of weather (particularly in the UK!) which affects the amount of energy that can be generated. With the help of AI, it is easier to predict weather patterns and adjust energy usage and storage accordingly.  

If your business is on a flexible energy contract, incorporating AI technology into your energy procurement strategy could help you secure the best rates. 

Green Hydrogen Initiatives 

At the end of 2023, the UK government announced a £2 billion fund to support 11 green hydrogen projects over the next 15 years, with the aim of boosting hydrogen production capacity.  

This investment is expected to create new jobs, attract private funding, and make the UK a leader in hydrogen. It will also build a strong hydrogen supply chain, helping energy-intensive industries like manufacturing and transport switch to cleaner energy. 

With these 2025 energy predictions in mind, it is important for businesses to create a plan in order to navigate the energy landscape – securing the best rates and avoiding unwanted price fluctuations. 

The biggest factors set to impact the energy market in 2025 are geopolitical factors, which can cause volatility. A great way to protect your business from price uncertainty is by considering the type of business energy contract you opt for. 

By locking in your rates with a fixed-price energy plan, this ensures cost predictability and can help give you peace of mind, knowing that your energy rates are set for the duration of your contract and that you’re protected from unexpected price rises and market volatility caused by geopolitical events.  

For those who prefer to closely monitor the peaks and troughs of energy prices and take advantage of the low-price periods a volatile market can sometimes offer, you might want to consider a flexible energy contract. It’s key to keep an eye on market trends with a flexible contract, in order to lock in your prices at the most opportune time.  

Flex energy contracts enable you to adjust your forecasting and purchasing strategy in response to market fluctuations, giving you greater control over your energy costs. By spreading your purchases over time, rather than committing to a fixed rate upfront, you can take advantage of price dips and mitigate the impact of sudden spikes, choosing to fix and unfix prices at times that suit you, and secure energy purchases as you confirm orders. This approach allows businesses to be more agile in their energy procurement, optimising their costs while maintaining budget certainty. 

Focussing on embracing energy efficiency is another great way to set your business up for success in 2025. This could involve conducting a business energy audit to identify areas where you can improve and create an actionable plan. You can then implement energy-saving measures to boost your efficiency and save on your energy costs. For some helpful and inexpensive green tips, check out our energy saving guides.  

As well as curbing your energy consumption, you could also consider diversifying your energy sources; whether that involves investing in renewable energy infrastructure or opting for a green energy plan without an upfront investment. When you opt for a green plan with Yü Energy, we can source bespoke Renewable Energy Guarantees of Origin (REGOs) tailored to your business needs, ensuring your energy procurement aligns with your sustainability goals. 

If you want to streamline your business energy in 2025, Yü can help! We specialise in working with businesses to help them secure the best rates for their energy. Get your free online quote in under 30 seconds and set your business up for success today. 

You can also find out more about how business energy works in our free guides.